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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (8222)	10/18/2002 3:14:26 PM
From: stockman_scott	Respond to of 89467

Fed's Minehan: Economy Remains Fragile Friday October 18, 3:03 pm ET By Greg Frost NEW YORK (Reuters) - In a downbeat speech, Boston Federal Reserve Bank President Cathy Minehan said on Friday the U.S. economy remains fragile even without any new shocks, and consumer spending may be starting to wobble. In comments that broke with the tone of cautious optimism expressed by other Fed officials recently, Minehan said the economy remains a fragile balancing act between optimistic consumers and pessimistic businesses. "But how long can the consumer hold out? The risks here seem firmly on the downside," Minehan said in prepared remarks to the Newburyport Chamber of Commerce in Massachusetts. Her comments sounded far more pessimistic than most of her colleagues at the Fed who have spoken in recent weeks. Fed Governor Ben Bernanke said this week the economy was still in good shape, and Minneapolis Fed President Gary Stern said the risk of falling back into recession was low. Minehan's reasons for caution spanned several sectors of the economy. She said business confidence was low, suggesting private firms would not be the "cavalry" to rescue the economy, and there was not much help from other areas either. Real estate investment was showing signs of stagnation, strong federal government spending was being offset at the state level, and the rest of the world was likely to provide little help, Minehan said. "Even without further blows the economy remains fragile," said Minehan. Minehan is not a voting member of the Fed's policy committee this year. But her comments are interesting because the Boston Fed is normally considered one of the more "hawkish" regional Fed banks, a term that suggests a greater worry about inflation and a leaning toward higher interest rates. In another signal of concern, the Boston Fed made a rare request for a cut in the Fed's lesser used discount lending rate in August, according to minutes of the meeting. SIGNS OF WOBBLES Minehan's comments had little impact on the bond market, which was trading quietly after huge losses this week. Besides Minehan, Fed policymakers have not expressed much concern about whether consumer spending is starting to flag. Many private-sector economists have cautioned that household spending, which has been solid through the year and the main driver of economic growth, could weaken. The Federal Reserve held the official federal funds rate steady at 1.75 percent at last month's meeting. But two of the 12 policymakers voted for an immediate rate cut, and many economists on Wall Street believe another cut is likely before year's end. The Fed next meets to set policy on Nov. 6. Minehan told the business audience although interest rates would eventually need to rise as the recovery proceeds, for now "there is a need to focus on supporting the fragile recovery." She said the decline in household wealth could begin to take its toll on consumer spending, as could the lack of jobs growth, slowing real wage growth and falling consumer confidence. In October, consumer sentiment fell to levels below even those seen in the immediate aftermath of Sept. 11, and retail sales in September were weak. "The consumer, if not the economy, may be starting to wobble," the central banker said. "If business confidence does not increase soon, the current balance between consumption and investment may not last, making even the recent tepid economic performance difficult to match. Recent data seem to suggest that concerns about the consumer may be justified," Minehan said. On the business side, prospects for corporate profits were "dicey," firms are yet to start hiring, and even the recent increase in productivity may reflect businesses' lack of confidence. Geopolitical events, or even the uncertainty surrounding them, could affect confidence in a way that would disturb the current delicate balance. But she did add that monetary policy was accommodative and said the economy had remained resilient over the past two years and was generally expected to remain so "over the coming period." Later, in answering questions from the audience, she said she "can't give up faith" in the national economy. Minehan, whose Federal Reserve District covers six northeastern states and includes the I-495 Technology Corridor, said the recovery in that region has paused in recent months. The local unemployment rate has continued to rise as the national level has stabilized.

To: Raymond Duray who wrote (8222)	10/18/2002 5:30:42 PM
From: SOROS	Read Replies (3) \| Respond to of 89467

<font color=red>Daily Golden Doghouse Blues</font> "escalating trade deficits are a good thing, right Mike? it means the indefatigable US consumer proceeds with endless purchases of Japanese Korean cars, Sony stereos, Chinese clothing and trinkets, Korean chips, etc, which indicates incredible resilience in the face of dogged debts, right? it doesnt matter really that the consumer spending growth rates are exceeded by consumer incursions of greater rates of debt, right? foreign purchases of our wonderful products will catch up, as their expanding economies develop a more robust middle class, as debt financing enjoys a new burgeoning growth of its own, as they recycle some of their export surplus dollars into new hightech infrastructures, right? the management of the US economy is vacant with the Federal Reserve having usurped power to control banking... and essential effing nobody in control of economic policy... the US Ship of State wanders as a derelict at sea while Trez ONeill declares the trade gap as meaningless while Fed Hairless Chairman Greenscrotunm declares the economy strong, as long as it continues to rape in housing equity while Wall Street Whores declare that the bull has returned, looking for bear blood gimme a break a fuching train wreck is coming housing vs income stocks vs valuation money outflows vs inflow requirements illiterate Americans are being played IBM news was horrible Gold Cartel players are now indistinguishable from major bankers of ordinary ilk each owns a brokerage arm, and is busily spinning yarn we repeat 1929 without even the awareness of history we are a nation of illiterates, fully deserving banana republic status"